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Financial services accounted for 8.3 per cent of UK GDP in 2007 (most recent official estimate), having risen steadily from 5.3 per cent in 2001. This is slightly higher than the US share of 7.5 per cent and of Japan 6.7 per cent. In France and Germany financial services’ share of GDP is lower at 4.6 per cent and 3.8 per cent.
The growth in UK financial services’ share of GDP in the decade up to 2007 contrasts with the declining share of the manufacturing sector: down over a third from 20.3 per cent to 12.4 per cent. The share of GDP accounted for by professional services has risen from 2.9 per cent in 1997 to 3.9 per cent in 2007.
The financial services industry is heavily concentrated in London, which accounted for 45 per cent of value added generated by the sector. As much as 18.3 per cent of GDP in London was generated by financial services, more than double the UK share of 8.3 per cent in that year and a reflection of London’s status as a global financial centre.
Although down from highs recorded in the previous year, financial services continue to make a substantial contribution to the UK balance of payments and to domestic taxation in 2009. The 2009 trade surplus in UK financial services is expected to reach around £35bn, 20 per cent down on the 2008 total, while the contribution of UK financial services to UK government taxes was £61.4bn in 2008/09, down 9 per cent on the total two years earlier.
IFSL’s annual report Economic Contribution of UK Financial Services brings together indicators that show the contribution that financial services make to the UK economy. Financial services accounted for 8.3 per cent of UK GDP in 2007 (most recent official estimate), having risen steadily from 5.3 per cent in 2001. This is slightly higher than the US share of 7.5 per cent and of Japan 6.7 per cent. In France and Germany financial services’ share of GDP is lower at 4.6 per cent and 3.8 per cent. A long time lag in publication of some relevant statistics means that this year’s report as yet only partly reflects the impact of the downturn on the economic contribution of financial services. However, the drop in employment in financial services is already evident.